Subscribe

Sorry I don't have a clever intro. I was watching the craziest movie last night. On CNN.

1 big thing: Judgment day for AT&T-Time Warner

Illustration: Sarah Grillo/Axios

A federal judge will announce his decision Tuesday whether AT&T can acquire Time Warner for $85 billion. Ahead of the ruling, Axios' Sara Fischer and David McCabe have a look at the stakes and lay out various potential outcomes.

Why it matters: Today's court decision will shape the media and telecom landscape, as it will set off chain reactions for other media mergers and will determine how viewers watch video content for decades to come.

There are a range of possible outcomes. Judge Richard J. Leon could choose one of two straightforward options: Clearing the deal without conditions attached or blocking it outright.

But he could alsogreen-light the purchase only if certain conditions are met, whether or not he finds that it violates antitrust law. For instance, Leon could:

1. Order that arbitration be used to defuse concerns about AT&T using Time Warner's content as leverage to gain an advantage over competitors in the video space, after AT&T already indicated it may be open to using that process.

That could in theory allow negotiations to take place without the threat of a "blackout" where a programmer pulls its content from a distributor when they can't reach a deal.

2. Tell the companiesto sell off key assets, which would be less palatable to AT&T.

Selling either DirecTV or the Turner networks (or a portion of them), including CNN and TNT, would undermine the central benefits of the deal for AT&T.

DOJ requested some divestitures before filing its lawsuit, and AT&T refused.

Between the lines: A win for AT&T would probably make it easier for TV networks to merge with a tech or telecom company — essentially fusing the content delivery systems with the content itself.

Other deals at stake: If AT&T prevails, it could cause cause 21st Century Fox to seriously consider Comcast's higher offer over Disney's. An AT&T win also bolsters T-Mobile's case to regulators that it should be allowed to buy Sprint.

Beyond tech and telecom deals: It would signal to all U.S. companies that a vertical merger — combining with a company that's not a direct competitor — is on strong regulatory footing.

On the other hand: A win for the DOJ will raise questions about a slew of outstanding deals in other realms, including media and telecom as well as spaces like healthcare, where CVS is trying to buy Aetna and Cigna wants to acquire ExpressScripts.

What we're hearing: News coverage and analysts' notes over the past several months have suggested that the DOJ failed to deliver a compelling argument to block the merger. But those headlines could be over-simplifying the logic of the case.

What to expect: Leon has called reporters and stakeholders back to the court room to issue an official ruling Tuesday afternoon. This is highly unusual for a district court judge, and could foreshadow a potentially complex ruling.

It's been quite the rough patch for Qualcomm, what with having to deal with a hostile takeover bid, a protracted legal battle with major customer Apple, a host of antitrust fights around the globe, plus the slowing of its key market in smartphones.

Yes, but: The looming arrival of 5G offers the potential for the smartphone market to eventually return to double digit growth, president Cristiano Amon told Axios in an interview Monday.

Amon describes some reasons why Qualcomm is optimistic:

1.Transitions are good times for the market leader, and Qualcomm expects to be head of rivals. Device makers often look to secondary suppliers and homegrown alternatives as technologies become more mature, while turning to the first to market in the early part of a transition.

2.Head start: The first 5G phones should hit the market by next April, with a number of flagship Android devices supporting 5G throughout the year. The transition could also offer a chance for Android to make inroads against Apple, given that Apple tends to wait until cellular technology is more mature before bringing over the iPhone.

Competitive shifts could also help Qualcomm, with Chinese players such as Xiaomi, Oppo and Vivo using the dawn of 5G combined with Qualcomm chips to make inroads in Europe and elsewhere.

3.From phones to computers: Qualcomm has long hoped to crack the market for chips that power PCs. Historically, customers haven't wanted the tradeoffs that come with using a non-Intel processor and have been loath to sign up for another data plan. With its ultra-low-latency and high data speeds, 5G could change that.

4.No standards war. In past cellular generations, there have been multiple competing efforts with different carriers or markets using different technologies. With 5G, Amon said all signs point to a single global standard.

Yes, but: Transitions can also be messy times. The first 4G phones, such as the HTC Thunderbolt, were buggy and had terrible battery life. Amon says the industry knows that it needs to be able to deliver all-day battery life if it wants to include 5G in next year's flagship phones.

3. Facebook replies, but doesn't answer Congress

Facebook responded to thousands of questions posed to CEO Mark Zuckerberg by members of Congress, though in some cases it didn't fully answer the questions, or it simply referred to prior statements.

What we're hearing: In one example, Zuckerberg was asked:

In your testimony, you discussed two typical business models employed by social media companies to make content available to users: an advertising-supported model and a subscription-based model. If Facebook were to shift from an advertising model to a subscription model, how much would consumers expect to pay in order to access Facebook content? Would you ever consider making such a shift? If not, why not?

Facebook responded:

Like many other free online services, we sell advertising space to third parties. Doing so enables us to offer our services to consumers for free. This is part of our mission to give people the power to build community and bring the world closer together.

My thought bubble: If I were a TV lawyer, I'd rise up and say, "Objection, your honor, move to strike as non-responsive."

The bottom line: The responses were a mix of answers and non-answers. There weren't any immediate new bombshells, though the responses stretch over hundreds of pages and our eyes glossed over after a while.

4. Survey: Interest in Facebook dating service

Expand chart

Data: Alpha; Note: Survey conducted May 22, 2018 amongst 606 people who had used Facebook in the past 3 months and a dating app in the past 12; Chart: Andrew Witherspoon/Axios

When Facebook announced it will be diving into the online dating business, it seemed like an untimely move for a company facing criticism for not respecting users' privacy.

But according to data collected by user research firm Alpha, the majority of Facebook users who already use a paid or free dating app would be interested in an online dating service from the company.